The accountancy profession in the Philippines is a highly regulated profession. It is regulated by the Professional Regulatory Board of Accountancy (PRBoA), Securities and Exchange Commission, Bangko Sentral ng Pilipinas, Insurance Commission and other regulatory bodies.
Those CPAs engaged into public practice should comply with the rules and regulations governing the practice of profession. They should also embrace and support the quality initiatives of these regulatory agencies. The objective of these issued rules and regulations is to raise the bar of the quality of the audit work which is positively related to gaining the public trust in the work of the CPAs in public practice. They should be committed in creating an environment of accountability and responsibility with the audit services it provides to the public. In response to gaining the trust of the investing public to the accountancy profession, quality assurance review in the audit services of the CPAs in public practice must be established.
The profession is governed by Republic Act No. 9298 (Act), also known as the Philippine Accountancy Act of 2004. Citing Sections 9 (g) and (h) of the Act, it provides power to the Professional Regulatory Board of Accountancy (PRBoA) to (g) to monitor the conditions affecting the practice of accountancy and to adopt measures, including the promulgation of accounting and auditing standards, rules and regulations and best practices as may be deemed proper for the enhancement and maintenance of high professional, ethical, accounting and auditing standards; and (h) to conduct an oversight into the quality of audits of financial statements through a review of the quality control measures instituted by auditors in order to ensure compliance with the accounting and auditing standards and practices.
As part of the implementing rules and regulations of Act, PRBoA issued on December 4, 2015 Resolution No. 244 series of 2015, the “Revised Rules and Regulations for the Conduct by the Professional Regulatory Board of Accountancy of Oversight into the Quality of Audits of Financial Statements and Operations of CPA Practitioners. The said regulation formalized the implementation of the Quality Assurance Review (QAR) Inspection Program in the Philippines.
The QAR Inspection Program is a comprehensive appraisal or review conducted by the PRBoA, or its duly authorized representative, on the system of quality management of a public accounting practitioner. A system of quality management is a system designed, implemented and operated by a firm to provide the firm with reasonable assurance that: (i) The firm and its personnel fulfill their responsibilities in accordance with professional standards and applicable legal and regulatory requirements, and conduct engagements in accordance with such standards and requirements; and (ii) Engagement reports issued by the firm or engagement partners are appropriate in the circumstances. This implies that the practitioner, whether small, medium or large, has established and is following a disciplined and systematic intellectual approach to producing good quality work. The QAR Inspection Program shall determine and evaluate whether the system of quality management is in place and is operating effectively.
The QAR Inspection Program is mandatory for all CPAs engaged in the public accounting sector whether as an individual practitioner or a partnership. The purpose of the program is to provide a comprehensive guidance to ensure that all CPAs in public practice establish and maintain a system of quality management designated to provide a reasonable assurance that they are complying with professional standards and relevant, ethical and regulatory requirements.
Quality Assurance Review procedures also ensure that we are responding to the ever changing needs of the stakeholders such as technological changes.
Finally, CPAs in public practice should positively welcome the Quality Assurance Review Program as a way of transforming the profession and this is the way to the future. They should participate in the implementation by attending webinars or by volunteering their system of quality management or audit files for inspection. Lastly, they should enjoy their QAR experience to sustain the relevance of the accountancy profession.
(The author is the Audit and Assurance Leader, Navarro Amper & Co. – Deloitte Philippines. He was 2021 President of Association of CPAs in Public Practice.)